Gemini punishes OTC trading desks for GUSD redemption

US-based cryptocurrency exchange closed accounts of two over-the-counter trading desks over an attempt to redeem Gemini’s GUSD stable coin, introduced in September 2018.
According to the representatives of the OTC desks, the company did not provide any explanations of the decision. The notification said that the accounts are closed following a review, while the exchange was  “not able to elaborate on the specifics for this decision.”

The affected companies preferred to stay anonymous to avoid repetitional damage. However, their claims raised questions about the business practices within the stable coin market with a capitalization of nearly $3B.

Gemini closed an account of one OTC trader from Latin America after receiving a notification that the company planned to redeem GUSD worth of several million dollars, CoinDesk reports, citing an email correspondence between the parties. 

OTC trading desc seems to be reluctant to redeem GUSD for fear of having their accounts closed.

“So many players are unable to redeem, even very, very big OTC desks. Having an account doesn’t guarantee redeemability”, U.S.-based OTC desk told CoinDesk.

In response to the claims, Gemini provided the following statement:

“Gemini is a New York trust company. As a result, some potential customers will be unable or unwilling to pass our robust compliance program. This is a feature, not a bug, and what makes Gemini different. We understand this may frustrate some, but this is necessary to build trust in the future of money.”

According to the statement, Gemini redeemed over  $133 million worth of GUSD, which is more than half the current supply in circulation.

GUSD now takes the 51st place in CoinMarketCap’s rating with a total market capitalization over $83M. Its average daily trading volume exceeds $15M. The coin is most actively traded at OKEx.

In a separate story we reported that Gemini would have to reimburse Charlie Shrem litigation fees to the tune of $45,000.